Will you still love me, when I'm 64? The relevance of '50s financial engineering today

Will you still love me, when I’m 64? The relevance of ’50s financial engineering today

Financial engineering is and remains a divisive term. In my Finextra blog last month, I argued that leading institutions were weighed down by legacy. Financial engineering is perhaps an example of such a technology that has also been tarnished by the Global Financial Crisis (GFC) of 2009. So, seven years later, financial engineering feels vintage when sat alongside exciting “new” big data and data science fields. But I believe history matters in my field. When you consider the foundations of “quant”, financial and risk modelling, you roll back 64 years and arrive at the work of American economist Harry Markowitz in modern portfolio theory in 1952 This seminal work sprung from Markowitz spotting that the then existing methods to understand stock prices did not consider the impact of risk. From…